SPY Trends and Influencers May 6, 2017

A weekly excerpt from the Macro Review analysis sent to subscribers on 10 markets and two timeframes.

Last week’s review of the macro market indicators saw heading into May that equity markets were making and testing highs again, but in a mixed fashion with strength shifting to the SPY and QQQ and away from the IWM. Elsewhere looked for Gold ($GLD) to continue the pullback in its uptrend while Crude Oil ($USO) consolidated deciding if it is a bottom or just a pause. The US Dollar Index ($DXY) continued to move lower while US Treasuries ($TLT) were biased lower in consolidation.

The Shanghai Composite ($ASHR) seemed to have found support and Emerging Markets ($EEM) were biased to continue higher. Volatility ($VXX) was back at abnormally low levels and looked to remain very low going forward, keeping the bias higher for the equity index ETF’s $SPY, $IWM and $QQQ. Their charts showed strength in the SPY and QQQ in the short term but the IWM rolling over. On the longer timeframe it was similar with the QQQ leading and the SPY turning up, but the IWM stalling at resistance.

The week played out with Gold continuing lower all week while Crude Oil broke to the downside early and ran lower but finally caught a bid Friday. The US Dollar marked time near its 200 day SMA while Treasuries drifted lower. The Shanghai Composite lost support and started lower while Emerging Markets made a new high early in the week and then pulled back.

Volatility continued to hover at historic lows testing support. The Equity Index ETF’s were mixed with the SPY moving sideways in a tight range, the QQQ starting higher but the also marking time sideways, while the IWM started the week moving lower before it turned sideways too. What does this mean for the coming week? Lets look at some charts.

SPY Daily, $SPY

The SPY came into the week after ending the prior at the low on Friday. Monday printed a doji star adding more fuel to a possible drop and then ran three more doji’s in a row before a small push to the upside Friday. That put the SPY pennies from an all-time high close after trading in the narrowest range since the week ending January 16th. If not for the push higher Friday it would have stayed in a range less than 1.5 points! It may not seem like much but that push higher Friday may end up being pretty significant.

On the daily chart you can see that move started a break of consolidation to the upside. The RSI is in the bullish zone and rising with the MACD also rising. Both momentum indicators have a lot of room to run. The Bollinger Bands® are also opened to the upside. Continuation higher will break a broader 2 month range and turn things very bullish.

On the weekly chart there is continuation of the break of trend resistance from last week. The RSI is bullish and moving higher with the MACD about to cross up. The Bollinger Bands® on the longer timeframe are turned to the upside. There is no resistance above 239.80 but a Measured Move to 245. Support lower comes at 237.10 and 236 followed by 233.70. Resumption of Uptrend.

SPY Weekly, $SPY

Deep into the earnings season and with the May FOMC meeting and non-farm payrolls in the books, equities are looking strong again. Elsewhere look for Gold to continue in its downtrend while Crude Oil also is biased lower, but with caution for a reversal. The US Dollar Index is weak and moving lower while US Treasuries are also biased to the downside. The Shanghai Composite rounds out the markets looking weak as it moves lower while Emerging Markets are biased to continue to the upside.

Volatility looks to remain at abnormally low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all look stronger in the short term with the SPY and QQQ leading the way. In the longer timeframe the IWM is at resistance while the SPY and QQQ look set for a series of new highs. Use this information as you prepare for the coming week and trad’em well.

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